[Federal Register Volume 63, Number 30 (Friday, February 13, 1998)]
[Notices]
[Pages 7488-7489]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3631]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39622; File No. SR-PHLX-97-45]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the Philadelphia Stock Exchange, Inc. To Amend Its By-Law 
Article XII, Section 12-10, With Respect to the Eligibility of Persons 
To Serve as Inactive Nominees

February 4, 1998.
    Purusant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on December 15, 1997, the 
Philadelphia Stock Exchange, Inc. (``Phlx'' or ``Exchange'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Phlx.\2\ The Commission is publishing 
this notice to solicit comments on the proposed rule changes from 
interested persons.
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    \1\ 15 U.S.C. Sec. 78s(b)(1).
    \2\ On January 14, 1998, the Exchange submitted Amendment No. 1 
to the filing, in which it proposed a new rule, Phlx Rule 21, 
defining ``Inactive Nominee,'' and explaining the role of an 
Inactive Nominee on the Phlx. See Letter from Murray L. Ross, vice 
President and Secretary, Phlx, to Richard Strasser, Assistant 
Director, Division of Market Regulation, Commission, dated January 
14, 1998. Amendment No. 1 is described further in note 3 and in the 
text, below.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Phlx hereby proposes to amend its By-Law Article XII, Section 
12-10, with respect to the eligibility of persons to serve as Inactive 
Nominees.\3\ The text of the proposed rule change to By-Law Article 
XII, Section 12-10, is set forth in full in Exhibit A.
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    \3\ In Amendment No. 1, the PHlx proposed a new rule, to be 
designated as Rule 21, which would define an Inactive Nominee as 
follows:
    The term ``inactive nominee'' shall mean a natural person 
associated with and designated by a member organization whom has 
applied for and been approved by the Admissions Committee for such 
status and is registered as such with the Office of the Secretary. 
An inactive nominee shall have no rights or privileges of membership 
unless and until said inactive nominee becomes a member of the 
Exchange pursuant to the By-Laws and Rules of the Exchange. An 
inactive nominee merely stands ready to assume legal title to a 
membership upon notice by the member organization to the Office of 
the Secretary to be transferred intra-firm on an expedited basis.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for the Proposed Rule Change

    In its filing with the Commission, the Phlx included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Phlx has prepared summaries, set forth in sections 
A, B and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    Phlx By-Law Article XII, Section 12-10, sets forth the eligibility 
requirements with respect to persons designated to serve as Inactive 
Nominees. An Inactive Nominee must be a person affiliated with a member 
organization who has submitted a membership application and met all 
membership qualification requirements, including an examination 
administered by the Phlx's Market Surveillance Department. The proposed 
amendment will allow an approved Inactive Nominee to assume the legal 
title to a membership on an intra-firm and expedited basis in the event 
of an emergency due to illness or other factors. In Amendment No. 1, 
the Phlx stated that an Inactive Nominee would serve in the ``event of 
an emergency due to illness or other factors,'' and ``would allow a 
member organization to have a full complement of traders or specialists 
available to conduct business on the Exchange trading floors by 
transferring legal title intra-firm to the inactive nominee thereby 
making that person an Exchange member.''
    The proposed rule change would subject a person designated as an 
Inactive Nominee to the existing membership application process, 
including fees. Additionally, the member organization with whom an 
Inactive Nominee is affiliated will be subject to a fee for the 
privilege of maintaining an Inactive Nominee's status.
    A member organization seeking to designate an affiliated person as 
an Inactive Nominee shall submit a membership application on behalf of 
a proposed Inactive Nominee, who would go through the existing 
membership application process. Upon meeting all membership 
requirements and after posting for a two-week period in the membership 
Bulletin, this person will be registered as an Inactive Nominee. Upon 
notice filed with the Phlx Office of the Secretary in writing prior to 
9 a.m. on any business day the Exchange is open, under specified 
circumstances, an Inactive Nominee may assume the legal title to a 
membership on an intra-firm basis and be eligible to transact business 
on the Exchange that day or for such longer period consistent with the 
seat lease or membership title and use agreement (ABC agreement).
    The proposed rule change is consistent with Section 6 of the Act in 
general, and in particular, with Section 6(b)(5) in that it is designed 
to promote just and equitable principles of trade, to prevent 
fraudulent and manipulative acts and practices, to foster cooperation 
and coordination with persons engaged in regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and national market system, as well 
as to protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Phlx does not believe that the proposed rule change will impose 
any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Phlx consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. Persons making written submissions should file 
six copies thereof with the Secretary,

[[Page 7489]]

Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, 
D.C. 20549. Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Section, 450 Fifth Street, 
N.W., Washington, D.C. 20549. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Phlx. All submissions should refer to File No. SR-PHLX-97-45 and should 
be submitted by March 6, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.

Exhibit A--Proposed Rule Change

The Philadelphia Stock Exchange, Inc.

By-Law Article XII, Section 12-10

Additions are in italics; deletions are bracketed
[Associate Memberships] Inactive Nominees

Ssection 12-10. A member organization may designate an individual as 
an ``Inactive Nominee.'' The member organization shall pay a fee for 
the privilege of maintaining the Inactive Nominee status.
    The following requirements shall apply to Inactive Nominees:
    (a) To be eligible for Inactive Nominee status, an individual 
must be approved for membership in accordance with the Rules of the 
Exchange.
    (b) An Inactive Nominee shall have no rights or privileges of 
membership unless and until said Inactive Nominee becomes an 
effective member and all applicable Exchange fees are paid.
    (c) An Inactive Nominee's status will terminate after six months 
unless it has been reaffirmed in writing by the member organization 
or terminated prior thereto. Further, the Inactive Nominee's status 
must be reaffirmed in writing every six months thereafter to remain 
in effect.

[FR Doc. 98-3631 Filed 2-12-98; 8:45 am]
BILLING CODE 8010-01-M